California Employment Law

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California Employment Law

I am salaried employee and the offer I signed is an at-will

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employment with a non-compete clause...
I am salaried employee and the offer I signed is an at-will employment with a non-compete clause (I reside in CA). My employer is based in Illinois and my project is located here in CA. I signed the offer here in CA. Recently, my work hours have been cut in half and therefore, my employer cut my salary into half and removed my health benefit as well. Is this legal for them to do? And would the non-compete clause be valid even if this situation is causing my family extreme financial hardship?
Submitted: 2 years ago.Category: California Employment Law
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7/7/2015
California Employment Lawyer: Patrick, Esq., Lawyer replied 2 years ago
Patrick, Esq.
Category: California Employment Law
Satisfied Customers: 13,085
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Hello and thank you for entrusting me to assist you. My name is ***** ***** I will do everything I can to answer your question.
As an at-will employee, your employer is free to terminate or modify the employment at any time for virtually any reason, regardless of what is fair or reasonable. So, the cut in work hours you describe would not violate any law.
Whether your non-compete agreement is enforceable is a more complicated question. California law strongly disfavors non-compete agreements, and finds them VOID in all but certain limited and non-applicable circumstances. (See Business & Professions Code 16600) So, in CA the agreement you describe would NOT typically be enforceable at all.
Unfortunately, though, the situation is not that simple.
If your agreement contains a "choice of law" provision indicating that the law of Illinois shall apply, and if your employer then seeks an injunction and damages against you in IL where "reasonable" non-competes are enforceable, a California court may honor that judgment pursuant to something call the "rule of comity." The rule of comity essentially dictates that California courts shall give full faith and credit to judgments entered by out of state courts, even if the California court would have reached an alternative conclusion.
This creates a very difficult position for employees with non-compete agreements specifying that the law of another state shall apply. The options are to either (1) breach their non-compete and hope that their employer doesn't sue or that the agreement will be found void pursuant to the law of another state, or (2) they can immediately file for something called "declaratory relief" in a California court asking the court to preemptively decide the issue of enforceability of this contract. If the employee obtains declaratory relief before an out-of-state judgment is entered, the California ruling will override any out-of-court judgment and the "rule of comity" will not apply.
The unfortunately murky state of the law has created a "race to judgment" situation that actually encourages people to sue each other so they can be the first to get a judgment. It's crazy and backward, but that is the state of the law in California at the present. If there is no "choice of law" provision then it is far less likely that an out-of-state court will find the agreement enforceable, but it is still possible.
Ultimately, you will need to calculate the risk of being successfully sued and factor that into your decision of what to do. The risk may be low if you are in another state because your employer may not ever find out that you are working for a competitor. They may also decide it's just not worth the time and expense of a lawsuit and let it go. Again, you need to make a calculation of the risk.
I hope that you find this information helpful. Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.
If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes moving forward.
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